Rawabi Vallianz Offshore Services (RVOS), a joint venture between Saudi Arabia-based Rawabi Holding and Vallianz Holdings Limited, recently issued its first $266.6 million Shariah-compliant sukuk as a private offering.
The company appointed Alinma Investment Company, GIB Capital LLC, Saudi Fransi Capital Limited and Saudi Hollandi Capital as the Joint Lead Managers on the issuance, with Saudi Fransi Capital appointed as sukuk holders’ agent and payment administrator. The sukuk proceeds were sold through a private placement to sophisticated investors in full and are to be used to fund partially the marine assets of RVOS over a period of five years.
“Given the forecasted growth of the company, sukuk have become a prominent financing product in the world nowadays,” Rawabi Holding Group Chairman Abdulaziz Ali AlTurki told Gulf News Journal. ”The issuance of these sukuk through financial institutions and investment funds are traded while abiding by specific rules and laws that follow such types of funding.”
Sukuk (Islamic bonds) are considered as important funding channels used to provide the required liquidity to finance projects at an acceptable cost. They also pave the way for other means of funding through financial and nonfinancial institutions and individuals, thus leading to an expansion of the finance base, reduced pressure on the banks’ monetary liquidity and strong support for the national economy. Sukuk provide protection for the investors by empowering them with the ability to diversify risks through calculated risk investment tools and a positive cycle of return on investment.
“These sukuk are unique as they were issued during this difficult time and volatile market, which is a strong message of confidence in the future of the business and the company,” AlTurki said. “Rawabi Holding brings together a significant experience of three decades in providing a diversified range of products and services, and has a strong business track record. Rawabi Vallianz specializes in marine services and solutions, and is empowered by Rawabi Holding and its Singaporean partner, Vallianz Holdings Limited, which is an established provider of offshore support vessels and integrated marine solutions to the oil and gas industry.”
The sukuk will help to improve the cash flow of the company by raising funds to grow the business at a reasonable finance cost along with giving it access to new means and tools of financing.
By issuing the sukuk, Rawabi Holding envisages better protection for investors with reduced risks and lower cost while delivering a risk/return profile that is unique to the asset class. It also intends to boost the Saudi national economy by offering investors diversified options of investing money and supporting funding expenditures even as it expands the reach of Islamic finance beyond Saudi Arabia.
“Sukuk issuance is yet another testament to Rawabi Holding Group’s solid reputation and strong business presence, which we plan to expand in 2016 in all sectors of the group,” AlTurki said. “Given the current market situation, we have maintained our client base and have ongoing plans to expand it during this year.”